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Konvoy Ventures is a thesis driven venture capital firm focused on the video gaming industry. We invest in infrastructure technology, tools, and platforms.

Narrowing the Uncanny Valley

Unity gaming report and the realism of graphics

Unity Gaming Report: 6 Observations

Unity just released their 2020 video gaming report. After reading through the report, below are the 6 points that I found most interesting:

1) People are playing during the weekday more than they were before the pandemic. There was a 52% redistribution of play time between the weekend and the weekdays. This shows that gaming is becoming a larger part of people’s day-to-day lives, not just entertainment or the weekends.  

2) Each genre of mobile games monetizes differently, primarily between in-app-purchases (IAP) and ad revenue. The largest IAP mobile game genres were Adventure (81%), Casino (77%), and Strategy (76%). The largest ad revenue genres were Word (80%), Arcade (63%), and Sports (60%).  

3) Ad revenue growth from 2019 to 2020 across almost every category increased around 40-70% year over year. This is impressive growth. The notable losers on ad revenue growth were Sports (-26.7%), Casino (4.6%), and Strategy (17%).

4) In free-to-play (FTP), only 14% of games achieve more than 1M daily active players. There is a long tail of content out there.  

5) According to Unity's survey of mobile game developers, the major concerns (needs) they have are valid ad revenue data, sufficient reporting tools, user level ad eCPMs, CPI data, and speed of access to intra-day data.  

6) Looking at retention metrics, it is interesting to note that aggregate stats for D1, D7, and D30 retention metrics are quite similar (if not better) when the games include ads vs when they exclude them. Overall, games with ads had stronger retention across all categories except role-playing games and simulation. It seems like gamers say they “hate ads” but in reality, it doesn’t materially affect their game play.  


Narrowing the Uncanny Valley

The personalization and realistic graphics within video games continues to see amazing advances, fueled by creators and technologists. To that end, Epic Games has officially unveiled MetaHuman Creator which spawns from the acquisitions of 3Lateral and Cubic Motion (check out the demo here). MetaHuman Creator is a browser-based, cloud-streamed app that takes real-time digital human creation from weeks or even months to less than an hour—at an unprecedented standard of quality, fidelity, and realism.

This is an essential milestone for Epic Games as Unreal becomes the engine for a vast amount of content across gaming, movies, and mixed reality experiences. With this technology, we may be on our way to narrowing the “uncanny valley”. The term “uncanny valley” is used to describe the point where robots or animated characters become more appealing up until a certain point where it becomes to feel strange.

The uncanny valley isn’t a new concept. It was coined in the 1970s and has even been the reason for the lack of success of some movie franchises like Final Fantasy. It’s such an important concept in entertainment that movies like Shrek had to tone back the realism of Princess Fiona as not to scare younger children (Notes on Design).

From a games perspective, we’re living in a world where gamers can personalize themselves in games to resemble themselves in the real world. MetaHuman can help gamers create truly convincing visual representations of themselves in virtual worlds. On the textures side, Unreal has also acquired Quixel who is a pioneer in photorealistic texturing for games.

Takeaway: video games continue to be increasingly realistic and the Unreal Engine is certainly at the forefront of this innovation. The gap of the uncanny valley is slowly getting smaller (will eventually flatten). This progress will keep unlocking the capabilities of virtual environments, increased levels of socialization, robust digital economies, vibrant entertainment value, and enhanced personalization in virtual worlds.